Skip to main content

tv   Whatd You Miss  Bloomberg  March 15, 2017 3:30pm-5:01pm EDT

3:30 pm
us, janus capital, bill gross. what did you learn in the press conference, mr. gross? bill gross: well,. not much. we learned that -- well, not much. we learned that janet yellen is a perpetual dove, even when conditions are rather hawkish in full employment, employment growth, and the stock market at an all-time peak, she proceeds in a gradual way. i do not think that is inappropriate. i think because of the high will have tobanks proceed in a gradual way. she is a duck, and that is why the markets preceded in the way they did. -- dove, and that is why the markets proceeded in the way they did. help me here with where we are going -- i think there is great confusion about where neutral is, and even, heaven
3:31 pm
forbid, one day we get too restrictive policy that would end financial repression. which year when we get there. --would we get there? bill: i think it would take longer than two years. to contract is neutral interest -- and right now it is below zero and it has been below zero the last five years. prior -- prior to lehman brothers, it was 1% or 2%. what is the answer for a high level world that was damaged significantly in 2009 and 2010? the fed is proceeding gradually. i think the neutral rate of interest in nominal terms is probably around 2%, 2.5%. is -- ituggesting 2019 is at 3%. it is approximately 0% on a longer-term basis, which means
3:32 pm
real interest rate at a zero percent level. it is a delicate process, and not only the fed, but the ecb, all doj -- all -- boj -- central banks have to tread carefully as they move up. scarlet: janet yellen stretched -- stress they were looking at a gradual rate of great increases. can the commitment of a gradual pace coexists with discussions on how to shrink the balance sheet? bill: oh, perhaps. as i have spoken before on your program, i do not think the fed is ever going to reduce its balance sheet. i think that is all poppycock. a $4 trillion balance sheet, basically reflective of a highly levered economy where there is $65 trillion of credit, and that we do seem the 4 trillion back to $1 trillion -- by reducing the $4 trillion back to $1 trillion, shows the economy levered at a
3:33 pm
one type of level, and that is to highly levered. the fed and the boj will never reduce balance sheet. pressureget there is on the european central bank to do just that -- consider tapering and quantitative easing. what would that look like once investors get wind of the european central bank making concrete steps in that reaction -- direction? right now it is increasing almost $80 billion a year. with the ecb does in terms of tapering, as you mentioned in your question -- the most significant factor in terms of treasury yields going forward -- of the ecb begins to taper over the next three or four months, 5reasury yields that 2 -- at 2. basically are at risk.
3:34 pm
the-year -- the comparison over 10-year bonds would narrow. they would cease, at least as far as it is concerned with institutional investing. it could precipitate a light tapering in terms of treasuries. tom: we have been privileged to speak with richard clarida, and one of the constant things we have gotten is there is more debt than there was years ago. we seem to be doing a fed policy, orthodoxy that goes back 10, 20, 30 years. bring up a chart right now -- this is something mr. gross mentioned in his monthly notes at janice -- total debt to gdp. over on the right side of his ronald reagan. of we go to bush senior, the gdp,on weakness in debt to
3:35 pm
the bush blowout, up to president obama, up to president trump. bill gross, what should be the policy description given our high debt levels? road toll, it is a hard get out of this particular trend, tom. 350% of debt to gdp is basically a highly levered type of number, and it needs to increase in order to continue to sustain nominal gdp growth. look at it in terms of an individual. if your credit card is not expand, and you cannot bring consumption forward like you did over the last several years, then your particular person power and spending power declined. it is the same thing in the u.s. economy. unless you can continue to doned debt, as china has at a rapid rate, the central
3:36 pm
bank has problems in terms of monitoring the economy. it could be a deflationary moment. moment. tom: are you finding comfort in bonds because you are worried -- his to do, ashas duke will go to the final four. the white line is equities total return. right now, equities are way out front. are you comfortable on constrained in bonds because equities are going to explode? like bonds.don't i don't think equities are going to implode because of the potential trump policies, and the market always maintaining some type of hope, and yellen maintaining a dovish posture. bonds are not my favorite vehicle. for the 10 year treasury, the forward curve for two years forward puts them at 3%, which
3:37 pm
is close to it four-point loss, which eliminate the most all of your income. bonds, to my way of thinking, even u.s. treasuries -- let's talk about german bonds, which yield nothing for the most part. bonds are not a favorite asset class in my opinion. scarlet: 30 you want to be, then, in your portfolio -- then where do you want to be in your portfolio? what do you want to be taken advantage of in your positions? bill: i want to take advantage of a gradual fed. there is the possibility of the ecb tapering, and that can precipitate some type of movement. if you see a gradual increase, what you want to do, and this is complicated, but when you want to do is sell volatility. you want to take advantage of a very compressed market, and a low-volatility market precipitated by central-bank policy. tom: --
3:38 pm
scarlet: so, you want to sell volatility. tom showed the chart on the return on fixed income versus equities. do you see volatility coming back even more in equities as well? bill: i think almost certainly. 12.vix is down below one would have to expect some type of movement -- not necessarily a black swan or a grey swan. 12 monthsnext six to of precipitates volatility in the equity markets. you have to be careful where you sell it. it is best sold, for instance, in the bond market, where it is hard for me to see you on the 10-year german bond moving any lower than 30 or 20, and to me, that is a low-volatility type of world. tom: let's rip up the fed's
3:39 pm
script, talk ecb, the election in the netherlands, the french elections, the two elections in france april into may, you are talking twice here about a bund play. what you presume european bond markets will do as we staggered through the french election? risk, tom,hat is the and you bring up appropriate -- appropriately. no investment is risk, shorting or going on. if the french election turns upside down, we have problems in italy, the netherlands, yes, nds take a bit because there is the expectation that maybe the euro dissipates, implodes, and german bunds go back to german marks in terms of pricing. there is a 20%, 30% black swan longtail risk in terms of that trade. matters, billhis
3:40 pm
gross. i have to fill out my bracket. i believe it is statistically possible that duke could play ucla in the final four. is that where bill gross is headed this evening? well, i think that is a possibility can i think ucla is pretty good and better than a three seed. two cats shown in the less four for a one seat. i look for ucla, kansas -- i don't like kansas, but i like kansas to show up in the final four, and i like duke. we will see. they have a great bunch of kids. tom: bill gross -- does he know there are 4000 312 janice shareholders just in kansas alone? bill gross, think you so much. i went with you because if i don't, david gura won't talk to me. scarlet: for professional reasons you would with unc. tom: i would with unc and purdue
3:41 pm
because of our wonderful executive producer. people happy.keep i was going to go with a blue theme. let me do a data check. get off of basketball. scarlet has been watching the bonds. the curve flattening at 119 basis points. the dow launches back toward the 21,000-level as well. we will continue. good perspective with joe weisenthal. all of that coming up on bloomberg radio, bloomberg ."levision, "the fed decides ♪
3:42 pm
3:43 pm
joining us now is bloomberg executive scarlet: editor, joe weisenthal, and carl riccadonna. generally, the fomc rate
3:44 pm
decision has come and gone -- 25 basis point increase, as expected. janet yellen answered a couple of questions. i thought it was interesting that we have a definition now of gradual -- three interest rate increases for the year, give or take one. ?hat was your takeaway, joe joe weisenthal: it is interesting look at the market reaction the widespread of the relative sometimes we used to talk about the everything rally, and that is broken up since the election with equities rally in, bonds selling off. today, you throw a dart at the screen, and you will probably land on a green square. i always like to look at the ao are etf, which takes a 60/40 equities bonds portfolio -- a portfolio split a lot of people have. it is having its best day since november 7. it is its best day since the election. it shows the degree to which people are buying everything on the board and brought diversified -- broad,
3:45 pm
diversified portfolios are doing well. how about you, carl? carl riccadonna: the biggest surprise, news, fed this is a fed not changing its stripes. it is extremely gradual. chair yellen expressed her comfort -- a high degree of comfort in having this gradual approach. they could take away or at a single rate hike to any of the future years, but this is not a said going through any sort of major conversion in terms of their outlook on the economy, and given that the market was not expecting a rate increase today until this extensive communications campaign, there were some lingering concerns out isre that maybe this fed starting to reassess the outlook and where they stand, and from chair yellen's press conference, from the lack of changes to the forecast, we see that was the filling out the case. saw marge is an
3:46 pm
opportunity to strike, sensing it would be a long, hot wait to hold on until may or june for the next move, so they struck when the iron was hot. scarlet: she made clear she is not envisioning anything from the past joe:. joe:she was very clear this is not a reassessment. reassessment, strategy shift -- we are as dovish as we always were. do you think she might have been leading her colleagues in the march rate hike or following in the march rate hike? carl: that is a question maybe we will understand better when we see the minutes or the transcripts. i did not get the sense that she has always been so cautious and moderate, that she was necessarily leading the charge. i think she is on the dovish side of the spectrum on the committee, and i suspect the hawks might have led. tom: the hawks have said what is the big rush here -- i thought
3:47 pm
kathleen hays within her to longer questions nailed it on gdp, where shall yen and -- chair yellen -- chair yellen said it is a noisy statistic. bill gross absolutely gdp. neil cash curry has to do with gdp. it is not there, carl. when will we see decent gdp? carl: it is not there, and we will not see it in the first quarter. that being said, i think policymakers have the confidence that we are grounding -- grinding to an ever lower unemployment rate below the estimated level of the neutral right, and you will generate more wage pressure, and that means more consumer spending and more gdp growth. so, it is coming relatively soon. wouldoe weisenthal, i suggest the title of the book from a president earlier, "hope and audacity" -- the hope and audacity means we will get who?
3:48 pm
--l: the question of joe: the question of why the change -- a coin flip, to make sure knew the fed was going to hike in march. i do not think she had a great interest to the question -- she said gdp was noisy. i still don't think we quite know why they put march on the table like that. carl: if we read the tea leaves, maybe it is the fact that we saw such a brilliant performance in the equity markets, and when you are a policymaker, you cannot say financial market instability. tom: this is important. we are down here in the smear mortal building of bloomberg television and radio. carl riccadonna is on the death star -- what is your gdp estimate to your noisy -- her noisy discussion? carl: for the first quarter i
3:49 pm
think it is going to fall. tom: out further. carl: for the full year we could do better than we did last year -- less you big 1.9% on year on year terms. this year, 2.25% is certainly within reach. that is better, but not lighting the market on fire. tom: what you see in literature -- is there a 3% economy out there to pull off this? measured rate? joe: most people seems -- measured rate? most people are skeptical we can sustainably be over 3%. who knows. people are always wrong. scarlet: i thought the question of conflict between the federal reserve and the white house was interesting. she said she would welcome growth policies and it is not a point of conflict. do you agree, carl? carl: i think she would welcome it if we had the right to prevent the structure and whatnot. we can support faster productivity growth than we have seen. that being said, she made it
3:50 pm
clear in no uncertain terms that if there is a significant fiscal policy leading to faster growth, the fed will have to lean against that. she met with the treasury secretary a while back, and i presume they had a similar conversation then, but i was a bit surprised how she so clearly stated, yes, we are looking at approach -- three by three approach to the next three years, however if there is fiscal policy coming along, we will move more aggressively. of course the market interpreted that as dovish as well. joe weisenthal was thick with us. carl riccadonna, thanks so much. tom: let me do a chart here. this is the carl riccadonna chart -- the most my chart of the year. let's bring it up your, michael, if you can. the idea, real gdp over 40 years.
3:51 pm
morning in america is on the left side of the chart. we are down, down, down to a run rate -- a regression below 2%, and the goal is to get that turned around and moving higher. noisy gdp chart. this is "the fed decides bloomberg,." ♪
3:52 pm
3:53 pm
the fedd morning -- decides -- good afternoon, i should say. i will be here tomorrow morning on bloomberg surveillance. scarlet fu. joe weisenthal appeared. scarlet: we brought him in early because we knew to get intelligence -- final thoughts on the last hour of the fed coverage from janet yellen's news conference. what was your take away? joe: let's look at the work function on the bloomberg. we talk about it all the time. tom: there you go. joe: to try to figure out what is next -- as you can see, the markets not assigning much volatility of a may hike. june is a coin flip, 47%.
3:54 pm
we are several months out from all of these, and we know what we were a few weeks ago go into this meeting, in the last two weeks the fed job owned it into a lock. at the moment, the markets assessing another hike as soon as june. scarlet: so, coin for, as you mentioned. and, tom, we have the updated dots everyone has been looking at, and you have been adding circles to the dots as well. we look at rate increases, but there is more coalescing their. tom: we go up on the median line, then go flat, flat, flat. kathleen hays is in washington or she has some final thoughts on one of the high points of today's press conference. kathleen: for one thing, it is interesting there were a couple of different ways in which people asked janet yellen what happened between december and march that you suddenly signaled that a rate hike would be appropriate in march.
3:55 pm
janet yellen said we have been saying that all along. one thing for sure -- she made it clear, the set is not facing the trajectory for rate hikes on anything the donald trump administration will or won't do when it comes to fiscal policy. she said this many different times. let's listen to this version -- i want toen: emphasize that while some participants have penciled in some fiscal policy changes into their projections, that the basis for the decision is the long goal of a maximum employment and price stability. president of the minneapolis fed dissented. it is not think they should raise rates now. that is what i asked about -- you don't see which pressures indicators,ugh two
3:56 pm
and furthermore gdp is tracking weekly. janet yellen says the data moves around. we are on the path where we see things moving toward the goal. and it is interesting to see -- we are not on a preset course, confident, but we will have to watch both sides of the trade when it comes to the fed and the rate hikes this year. scarlet: i want to turn everyone's attention to fed go -- our landing page. you are allowed to look at market-implied policy rates not just for the u.s., but the rest of the world as well. it gives you a calendar. evans will be speaking on march 20, for instance commit one: 10:00 p.m. our thanks to kathleen hays, tom
3:57 pm
keene, and joe weisenthal. that wraps up our special coverage of the federal reserve announcement, "the fed decides. would you miss and the market closes next. the dow up 122 points. this is bloomberg. ♪
3:58 pm
3:59 pm
scarlet: we are moments away
4:00 pm
from the closing bell. "what'd you miss?" .reasuries rally i'm scarlet fu. joe: if you are tuning in live on twitter, we want to welcome every our coverage weekday from 4:00 to 5:00 p.m. eastern. rates bythe fed raise 25 basis points this afternoon, as had been widely expected but it was a little more dovish than a lot of people anticipated in terms of its production for future rate increases and projections for economic growth and inflation. the take away for everyone was, the fed is sticking to its gradual path of rate increases. all systems go for equities and bonds. morethey could have made hawkish language. all they did was the height. everything else was pretty stable so investors took that as
4:01 pm
being pretty dovish. in terms of industry movers, it's a pretty broad advance. a 108 point gain for the dow. laggards were the financials, down about .10%. they benefit from higher rates are the idea that the monetary policy is tightening. you can see they were the laggards in that they didn't gain. the big gainers were energy stocks. energy had taken a huge hit over the last couple of days with oil tumbled two dollars a barrel. of individual movers, let's pull up some the companies we are paying attention to. mining among the big gainers. gold prices advanced following the fed division -- fed decision. southwestern energy a highlight
4:02 pm
citigroup raised its recommendation to buy. joe: let's look at the bond market were a lot of the bond action was significantly lower both in the two-year and 10 year interval. the 10 year yield has been in that range from long time. back down to 2.5. let's look at the intraday on the 10 year yield. not much of a mystery there, you could see the drop right when the minutes came out. nothing janet yellen said was perceived as being more hawkish or anything like that. let's look slightly longer, six months on the 10 year and we've been in this range for a long time, topping out at about 2.6% and then it goes to about 2.3%. we will see if perhaps we have topped out again for the time being. scarlet: take a look at the
4:03 pm
dollar, everything is green except for the box with the u.s. dollar. the biggest decline since january. if you look at the individual one pair that has been performing strongly all day long even before the fed announcement was the mexican peso. it jumped after peter navarro signaled softer rhetoric on nafta negotiations. he said he sees mexico and canada as part of a regional powerhouse. so the peso strengthening and moving beyond its 200 day moving average for those who are keeping track of technical levels. joe: on commodities, everything is green across the board. , gold surging up 1.5%. crude oil has been getting clobbered lately, up 2.3%. scarlet: those are today's
4:04 pm
market minutes. we have some breaking news, gopro is cutting jobs. seescutting 270 jobs and first-quarter revenue at the high end of the forecast. restructuring charges of up to $10 million. it is cutting jobs in a bid to return to profitability, or to make a profit. cuts,nd round of job eliminating 270 positions after cutting 15% of jobs in 2016. operating expenses this year will be about 18% lower. we also have earnings out from oracle. third quarter adjusted revenue, $9.27 billion. analysts were looking for nine point $26 billion come so just a hair higher than what analysts were looking for. $.69 was what it reported for last year. analysts are looking for $.62. the adjusted operating margin is 43% as well.
4:05 pm
2.4%e shares gaining about and we will bring you analysis of those results with cory johnson later in the hour. and breaking news on the dutch elections for the polls have just closed in the netherlands. the dutch liberal party appears to have come in first place again, based on the first exit polls. we will see how these hold up but this is pretty big because up until recently, everyone wilder's freedom party was likely to come in first. no one really thought the freedom party would form the next government. it would've been symbolically won, butig if they had it appears they did not even get particularly close. at first blush it looks like for the moment it looks like the populist way that's been the story of global politics for a long time seems to really flopped.
4:06 pm
they had a really bad poll yesterday. we will be monitoring these but at first glance it looks like they did badly. scarlet: you wonder to what extent this will influence the polling for the french election. is: the other big thing there is always anxiety that the nationalist parties will do on the ideae polls that people are embarrassed to say their voting for him. if this is the case in these results hold, perhaps there's still more to see. scarlet: we want to take a deep dive into the bloomberg. you can find our charts using the function at the bottom of our screen. let's start off with. go. this is how things look after the march 15 announcement. you can see we are still looking at three interest-rate increases for 2017 and three for 2018.
4:07 pm
it's moved a little more strongly in that direction i suppose is the way to put it. , theis the flip side historical. this is interesting. it shows the projections for where fed officials had seen interest rates heading by the end of 2017. ago, in september 2014, they anticipated rates about 3.75%. they've had to ratchet down there forecast ever since. in the last three months or so they have kind of reached a level where the market is seeing eye to eye with them. joe: this view is very enlightening and tells you a lot about the market. it looks like the general rate path which bottom last summer, you can see these dots bottomed at the same time. it wasn't until last september that the market dot showed a
4:08 pm
slight uptrend. it just shows that every quarter , every time the updated, they're going to go lower, and finally it looks like there's upward pressure but not dramatic at all. "what'd you miss?" was in michigan today to meet with automakers and announced the white house will re-examine fuel economy standards set by the obama administration. today trump signaled he was willing to cut them a break on the standards if the u.s. hires more autoworkers in return. he asked what one woman thought of the review. >> i heard that he is reinstating the midterm review. i think that is so important that we look at all the progress that's been made in the last five years in technology, how consumer trends have changed, and look at the whole environment, because we can do
4:09 pm
things that are going to improve the environment and not threaten jobs. i think we can do things that will create jobs and strengthen the economy, but do the right thing for the environment. this is not it on. this is something we need to be more effective and efficient and will have a greater impact on the environment. >> this is something you and your colleagues asked for. to say let's go back and take another look at this. point, if they had not changed the path, what gm have had to change the weights doing business? -- the way it is doing business? >> we would not be a to give people the choice they have today. they choose if they want an suv or a small car or an electric vehicle. we continued to invest in the chevrolet volt. we are very proud of that and it's doing well. it is second generation,
4:10 pm
doing well. we are making the investments to have the right products, but in the end, it's consumer choice. we have talked about it in the past, there is more change happening right now in the industry that has happened in the last 50 years. we look at this legislation, it was done five years ago before we were even talking about autonomous the way we talk about it now. at the rightok standards and how to improve the environment in the most effective way. it's what we all agreed to back in 2012. >> you mentioned the volt, which is in production and is being bought. at the same time, isn't it being driven to a large degree by what california is requiring? toxit steadily important meet our zero emissions. putting a great vehicle that happens to be elected. i've had them else from a couple of our customers and they absolutely love it.
4:11 pm
won all kinds of awards, including car of the year. we work hard -- we have worked hard to have an all electric to make an impact on providing that kind of choice for our customers. andresident trump came out address the audience. one of the things he said is he wants to stop job crushing regulations, as he called it. as a practical matter, is the california state having -- should we have a uniform standard across the country? >> we very much support having uniform standard. we think the three parties can work together and find solutions where we do the right thing for the environment, protect jobs, and grow the economy. don't dois here, if we this in a way that protects jobs and the vehicles can be affordable, we're going to be in
4:12 pm
a situation where people are going to be driving older cars. if you look at the technology improvements made from 11 years the lastday, just in three years we have doubled the amount of products we sell that per more than 40 miles gallon. over 30% of her -- already two models in our portfolio have over 30 miles per gallon. that was not available then. so we need to make sure vehicles are affordable and people are able to get into these vehicles, because i will have the maximum impact on the environment. i really think we can come together and do things in a more efficient fashion that will be better for the environment, for the consumer, for jobs, and for the economy. the president also talked about trade and what he saw as unfair trade that has taken away from american jobs and the american auto industry. one of the issues that is been raised is the border adjustment tax which is being proposed in congress right now. is there a version of the border
4:13 pm
adjustment tax that general motors could live with? on whatl depends exactly is it, and we don't know. long-range, is a high capital investment business. when he to understand what the requirements and runs are going to be so that we can make smart investments. sometimes the investments we put yearsce are in 10, 15, 20 . we have to make sure we voice our concerns to make sure we can support our company in the new tax environment. learned yetot to be and we are waiting to understand it. >> the president was outspoken about the fact that a lot of other countries are not terribly there in importing our cars. do you agree with him on that? are you pressing for trade reform to help general motors? >> we want an equal playing field. in confident if we can have an
4:14 pm
eagle field in the different countries we do business in, that our vehicles will do well. we wanted to be fair both ways. that is something he has addressed and were looking forward to seeing those changes. on an equal footing basis, i'm confident that whether it's a chevrolet or a cadillac, a buick, gmc, across the globe, we will succeed. >> the president hit hard on restoring america as a leader in automobile manufacturer around the world. capitalism ofore -- is it important to general motors? it's such a global company so does it really matter that much? grexit absolutely matters. we are strong across many regions of the globe, but this is our home. leading market share in this country and we want to continue to strengthen it. our headquarters is in detroit and it is still the motor city. we want to see that rebirth that
4:15 pm
he is talking about. joe: that was gm chairman and .eo mary barra later we will hear from the ceo of fiat chrysler, who as president trump to reinstate the rule. ,carlet: according to dow jones virtual financial is making a one company.e shortly before the regular trading session close, we saw a shares.in case e.g. -- kcg shares. most of the gains have held up in after-hours trading. it is valued at more than $1.2 billion. it is bidding at $18 per share for kcg.
4:16 pm
we'll have vincent reinhart coming up. this is bloomberg. ♪
4:17 pm
4:18 pm
for first word news. president trump says his administration will restart a review of federal requirements governing the fuel efficiency of new cars and trucks. speaking to auto company executives and workers in michigan today, the president said he would make it easier to make cars in america. president trump: i'm sure you've all heard the big news that we are going to work on the café standards so you can make cars in america again. i'm going to help the companies and they are going to help you. mark: the president also
4:19 pm
predicts that the u.s. will make thousands of additional cars and eventually become the "car capital of the world." has denied age request by native american tribes to stop oil and throwing through -- flowing through the dakota access pipeline while they appealed the decision to allow pipeline construction to continue. the ruling likely clears the way for oil to begin flowing next week. the tribes maintain an oil pipeline under the late a consider sacred violates their religious rights. the republican and democratic leaders of the house theyligence committee say see no evidence supporting the claim that the obama administration wiretapped him last year. speaking at a news conference today, the house intelligence chair said he doesn't believe trump tower here in new york city was tapped. >> the issue of the president talking about tapping trump
4:20 pm
tower, that evidence still remains the same that we don't have any evidence that that took place. theret, i don't believe was an actual tap of trump tower. mark: he is -- still waiting for the justice department to back up the wiretapping claims. the u.s. is charged for people, including two russian intelligence officers, over the theft of hundreds of millions of accounts of yahoo! users. the justice department accuses them of theft, conspiracy, economic espionage, wire fraud and theft of trade secrets connected to one of the largest data breaches in history. the indictments .2 actions deep inside russia's intelligence give moscow could access to compromising information on users of one of the world's biggest you mail platforms. the breach straight to derail the whose acquisitions by verizon.
4:21 pm
global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. joe: "what'd you miss?" the fed raised its benchmark interest rate for the third time since 2008, launches what is expected to be more rapid series of rate increases. in janet yellen's news conference she emphasized the risks of waiting too long. >> today's decision also reflects our view that waiting too long to scale back some accommodations could potentially require us to raise rates rapidly sometime down the road. which in turn could risk disrupting financial markets and pushing the economy into recession. joe: let's get some more insight spentincent reinhart, who 24 years at the federal reserve. he joins us from st. petersburg,
4:22 pm
florida. vincent, thank you very much for joining us. does everyone perceive this to be kind of a dovish decision? they didn't suggest any sort of major refrain of how they are looking at the economy or anything like that. wanted to think they go in march if there's no big rethink, why do they make it so clear over the last few weeks that they were going to go now? >> they told us they were going to do it, they did it, and then they didn't change their outlook. that tells you they are executing a plan. the plan is to tighten three times by 25 basis point gains in 2017. they have for press conference meetings to do it and they chose the march 1. that means they have two more times to go if they execute the plan. tolen was basically trying drain as much trauma out of the event and just convey that they think they've got time and they can go gradually. scarlet: do you think she did
4:23 pm
that? and caused to drama us to add if she is leading the fomc or if the fomc is leading her to do this? >> if you think you're going to tighten three times this year, why would you decide to go in march instead of putting it off until later? wherek this is a case chair yellen was leading from behind. her colleagues got out and spoke a lot. there was an enormous amount of fed talk over the intervening period, and she's been around the fomc long enough to understand that the best way to occasionallyis to accede to your colleagues. that's what she is doing. she conveyed a very gradual pace of rate renormalization. the fed is not a moving target here. our colleague kathleen hays
4:24 pm
asked an interesting question, what changed between december and march with the economy? there might be some seasonal stuff but it is still not that good. some of the wage measures are rising, but not particularly rapidly and there is a mixed picture. in your view, how strong do you think the economy is right now? >> i would say kathleen was pretty tenacious during the conference. if you asked me three months ago , i would have said the fed would take a pass on march would tend to have a first quarter pothole and that's what we are living through. i think they're basically forecasting or acting on a forecast. the forecast is something like 2% growth, which we have had since 2010, which is faster than the rate of growth with
4:25 pm
tax going away. there are no other sources of trauma in the sense that we are past the election, financial markets are not at all volatile. they are just trying to slip one in. the case for march versus june is not particularly compelling other than you have four meetings to do it, you have to do it three out of four of them. vincent reinhart, thank you so much for joining us from st. petersburg, florida. from new york, this is bloomberg ♪.
4:26 pm
4:27 pm
4:28 pm
4:29 pm
4:30 pm
mark: it's time for first word news. prime minister plans to discuss politics when he meets with president trump tomorrow. he says he will use the usually festive annual meeting before st. patrick's day to discuss >> and push the president on his plans for our citizens living illegally in the united states. minister's --e easily be geert wilders, sending a signal on halting the spread of populism.
4:31 pm
the liberal party is projected to take 10 seats in the 150 seat lower house of parliament compared with 19 seats for the freedom party. wilders party had to share second place with the christian , projected to get 19 seats. 17 conservative republican members of the u.s. congress are bucking longtime party positions and president trump everyday announced today they are supporting a clear statement about the risks associated with climate change as well as principles for how best to fight it, call the republican climate resolution by supporters, it covers support for science, and a call for economically viable policy. the government says or than 12 million people have signed up for coverage this year under former president obama's health care law, even as the republican-led congress debates
4:32 pm
its repeal. the number does not include an additional 765,000 people signed up under an option in the law call the basic health plan. counting those, total sign-ups approach 13 million people. iraqi forces are facing strong resistance from islam in state as the battle to take back iraq's second-largest city intensifies. an army commander says a wave of suicide bombings slowed their advance just 300 feet away from a critical bridge. the offenses are being waged from three directions with two divisions of special forces and of course the federal police advancing along the tigris river which splits mosul east and west. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. crumpton. this is bloomberg. let's get a recap of today's market action. a lot of green almost everywhere
4:33 pm
you look except for the dollar. stocks rose by the most in two weeks. treasuries rallied as the dollar tumbled as the fed raised rates as expected but did not change its timeline for future increases. basically a dovish hike. joe: people were expecting a broader rethink but basically everything else stayed the same. president trump visited u.s. automakers in ypsilanti michigan today. announced he would review fuel efficiency standards. five years ago regulators agreed to achieve in average of 55 miles per gallon by the year 2025. both sides agreed to reevaluate this year and next year to determine whether it is feasible. n the presidency in november, the epa moved to make it final. we caught up with the fiat crosser ceo and asked about his
4:34 pm
reaction to the review. specifically doesn't go far enough after a shift in the original plan? >> it did not, because what was embedded in the number that was was ana 2025 target assumption about how the fleet of cars produced in the u.s. would have shifted. i was there when the numbers were drafted, so i know the dialogue we had. it never envisioned a reduction in sudan's of the caliber that we witnessed over the last five years. we have all been surprised by this. as naïve as everybody else. we spent money installing the chrysler 200 and the. start. we made the assumption the sedan
4:35 pm
has a place in american landscape. i think we need to fix this. ,> more realistic objectives will they allow for greater investment in production in the u.s.? >> at think it will make it easier. it's going to remove a lot of the concerns that we have over pushing the price point of these vehicles beyond the accessibility level. the economics of this, we've seen this technology creep its way into cars every time we launch a new product, we keep in vetting all these vehicles with technology that did not exist in the previous edition. the fuel mileage issues, co2, all these things added to the burden, whether we can reshape the functional view of the car's being sold, i don't want to prejudge it. for all i know we will confirm what we had in 2025, but i think
4:36 pm
the fact that we did not follow due process was offensive. we made it clear to the administrator at the time that we thought it was out of place so i'm delighted that we've put the thing back in. >> yesterday mr. miller said he was interested in speaking with you about consolidation. is that a phone call that you have made? >> kelly just be clear about something? i was sitting at a press conference in geneva and was asked about the consequences of the tie up. it only makes sense that people were interested in maintaining dominance and privacy in a particular market. is exposed on this because the number two has 16% market share. at the end of the day you want to shore up your position. you don't have to go to harvard to figure this out. you can play one of these
4:37 pm
boardgames and probably get the same answer. someone asked me a very simple question, what would you do if that happened? i said i would play the following moves. mueller and i go back a long time. god bless him, he has probably one of the most horrible jobs in europe right now. but my heart goes out to him. i will continue to compete against him. ,e knows how to get hold of me i don't need to get hold of him. chrysler was the fiat ceo. scarlet: we have breaking news on tesla. tesla is raising money, $1.15 billion, $250 million will be share sale and $750 million will
4:38 pm
2022.vertible to the convertible note transactions will limit the solution effect of the share sale and they will use it to cut risk with the share sale. tesla is up more than 3%. the press release says elon musk will participate by purchasing $25 million of common stock. he's putting some of his own money where his mouth is. essay they're raising money to reduce the risk of the massive scaling up the business. the stock rising about 3% after hours. scarlet: let's get more analysis on the president's visit to detroit. .evin is standing by the message here from the president was that he will relax or look into relaxing fuel standards or take the first step toward relaxing fuel standards in return for the automakers hiring more workers in the u.s.. kevin: yesterday i was at a small business roundtable meeting with jamie dimon who
4:39 pm
spoke to reporters. he alluded to the economic confidence among ceos and business leaders. this is what the administration officials are saying is another example of that. all this comes ahead of the president releasing part of what is known as a skinny budget outline. that will come tomorrow morning. isrlet: the president pressing these automakers to hire more in the u.s., but if you look at how auto manufacturing payrolls have increased since the bottom in 2009. come inside the bloomberg here. the blue panel during the obama administration. total auto manufacturing payrolls have steadily recovered. with carg is not great sales plateauing. joe: how much more room is there on the upside? do we have any sense of the number of terms of new job creation?
4:40 pm
>> i think when you look at it in terms of the regulatory rollback we've seen from the executive orders coming from president trump in his first few weeks in office, it's a signal not only to congressional leaders, but also to investors as well as business leaders regulatoryhis priorities are. case in point, the 241 executive order just the other week of him requiring each agency to have to reduce to regulations for everyone regulation. it's largely seen as little more than a polite illustration and an attention grabbing headline. however, the message that is sent to industries like auto manufacturers as well as industries in the financial sector was simple. he's going to roll back regulations. that is the message that is positive to a lot of business leaders, including those in
4:41 pm
cities like detroit, where he was today. thelet: you mentioned skinny budget. give us some highlights of what we should be looking for tomorrow. are there any details we can wrap our heads around right now? are going to increase military spending by $56 billion. as a result they will cut funds from several agencies, including the in mind -- environmental protection agency as well as from the state department and a host of other agencies. but from sources i'm speaking with all afternoon, including conservative circles, they've not seen many details. i spoke with a couple of sources earlier today, republican financial types, and they were surprised with the lack of details coming out of his budget blueprint. this will be the roadmap that will set the course for all of the budgetary talks for the remainder of the fiscal year. much, but doct
4:42 pm
expect opposition to borrow from democrats as he looks to cut staff as well as budget at several of the agencies. a more broad paint picture here, that means he's trying to rollback regulations. thank you very much, kevin. scarlet: shares of oracle up by 3.3%. we look at third-quarter earnings, next. from new york, this is bloomberg. ♪
4:43 pm
4:44 pm
scarlet: oracle's push into cloud-based software is paying off. oracle reported third-quarter profit and revenue that topped analyst estimates. let's bring in cory johnson from san francisco. this is three straight quarters of revenue gains.
4:45 pm
corey: when the most interesting things about the conference call will be the discussion that we would not imagined a few years back, that is amazon web services making serious inroads and lowering a lot of oracle employees. they say we just pick up the phone and take orders. it will be interesting to hear the commentary about how they are keeping customers and oracle seeing double-digit growth. tesla,at's talk about which just announced another capital rate. how often do they do this, a couple of times a year? ory: if you lose a billion dollars a quarter in cash flow
4:46 pm
you have to come back and raise a billion dollars to tread water. they announced big plans and be over $2expenditures of billion by the end of the second quarter and they need a lot of money to do it. look at the cash flow burn. solarcity is a pile of burning tires in terms of how much cash it burns. they would like to bring that with this business, they've got issues. they will have to raise a lot of money just to build a factory to put out these successful model three. it's an enormous amount of heavy lifting. and $250 million of that will be through equities. joe mentioned that elon musk will be buying some of the equity. eventually it will dilute shareholders as well.
4:47 pm
i wouldn't expect this is the last time they would go to the public market. they have enormous capital spending needs in the near term in this doesn't get them very far. much, coryyou very johnson. decision day in the netherlands and it looks like the dutch therals will clobber populist party. we will have more on that election next. this is bloomberg. ♪
4:48 pm
4:49 pm
joe: "what'd you miss?" voting is over in the netherlands and the latest exit wilders party the was easily defeated.
4:50 pm
do you feel pretty good that these numbers will hold up, and how much of a surprise is this? netherlandss in the tend to be pretty accurate. we just had an updated exit poll in the last 20 minutes or so. that did not change anything from the first one a half hour earlier. surprise they got so many seats, it was more than the opinion polls were predicting. slightly less of a surprise that wilders didn't do as well as he was expecting. of latere a couple opinion polls on tuesday that indicated his support have slipped further way. scarlet: so what happens next? party is one of
4:51 pm
four at the moment that is jostling for second place behind the liberal party. he's not going to be in any way involved in the coalition negotiations. the other mainstream parties will now be talking about trying to form a four or five party coalition over the next few weeks and months. but's quite a long process people here are quite used to it. has atherlands never single party winning more than half the seats in parliament. joe: the other big storyline seems to be the collapse of the dutch labour party and the strong performance of the green party. what is the significance there? bad for theeally labour party. this is their worst result ever since they were formed just after the second world war. quarters ofree their seats in parliament. a lot of those voters have gone
4:52 pm
to the green. some have gone to the centrist party in a couple of the smaller parties. the dutcha blow for finance minister. he's not going to build a carry on that job even if labor stays in the coalition because you cannot have a finance minister from such a small party really. the question is whether labor, which used to be the dominant party in the netherlands, is going to want to stain government after this. they may want to regroup in opposition. scarlet: if you look at the market reaction, this is a market friendly results so far from the dutch election. 1.2% versuslying at the dollar. joe: the next big thing in europe is going to be the french election. wilders and le pen are not the same, the pen seems to be more on the left economically. does this provide some read
4:53 pm
through to that election, the fact that he didn't do that well? does that say anything about how she will ultimately perform? >> is really going to be difficult to extrapolate from the netherlands, which is a country with a lot of political parties, to a french presidential election scenario. in france, it's looking pretty sure that marine le pen is going to get through to the run off in the presidential vote. i would be wary of reading too much into it. investors are certainly taking it as a really good sign. scarlet: is there any coordination and discussion ders marine lel pen's camp? >> they've had joint appearances in the past, including one earlier this year in germany,
4:54 pm
quite a big event where they tried to set the scene for populist parties like there's making a move in this big year of elections in europe with the german elections coming up later as well in the autumn. that three-wayf election scenario has not turned out the way the populist would have wanted it to go. buckle: thank you, eddie , for staying late there in the netherlands to give us an early dutch general election results. time for the bloomberg business flash. anthem ceo try to push for changes to the gop's version of the affordable care act when he met with president trump on tuesday. the company's cfo confirmed they discussed cost-sharing subsidies and that medicaid remains a privately funded. anthem is among the biggest
4:55 pm
insurer still offering plans under the affordable care act exchanges. johnson --g jack , the ceo's firm assets lastions in year, says he sees a bond market rally in the weeks ahead and does not see a recession looming in the near term area for the first time in three years, wall street's bonus pull has risen. payouts were up 2% to almost $24 billion. that's according to estimates by the new york state comptroller. of stock exchange members jumped 21%. flashs your business update. coming up, what you need to know to gear up for tomorrow's trading day. this is bloomberg. ♪
4:56 pm
4:57 pm
scarlet: "what'd you miss?" a big rally in risk assets and bonds. the federal reserve raised rates as expected but did not change its projections from where it sees rates going in 2017-2018. the dovish hike lifted everything except the dollar. coming up, the bank of japan takes its turn next and
4:58 pm
announces its interest rate decision overnight and bank of england announces its rates decision. joe: tomorrow i will look at u.s. housing starts an initial jobless claims, all out at 8:30 a.m. eastern time. scarlet: and were looking for the white house to release its first budget outline called a skinny budget. joe: and treasury secretary steve mnuchin is due to meet with the german finance minister in berlin to discuss trade and economic issues. they will hold a joint press briefing, scheduled for 1:00 p.m. eastern time. we will have live coverage. scarlet: that does it for "what'
4:59 pm
♪ alisa: i'm alisa parenti. you are watching "bloomberg technology." let's start with a check of your "first word news." the fed raised its benchmark interest rate today. the move reflects the quality
5:00 pm
economy and could mean higher rates on consumer and business loans . it rose a quarter percentage point. the forecast is to more hikes this year. and the house intelligence bipartisan committee says they have seen no evidence of supporting claims that trump tower was wiretapped by the obama administration. jeff sessions also says he gave no indication to the president that his phones were tapped. the justice department wants more time to gather evidence. the president says his administration will restart a review of federal requirements for the fuel efficiency of new vehicles. he spoke with executives today promising to make it easier to assemble cars in america. and the netherlands exit polls suggest that the prime minister has one of parliament terry election, according to the ap, which is says anti-islam candidate -- has had a poor showing.

15 Views

info Stream Only

Uploaded by TV Archive on